Media and entertainment giant Paramount (NASDAQ:PARA) could continue to face ad-related challenges in Q4, noted Bank of America Securities analyst Jessica Reif Ehrlich. She maintained a Sell rating on PARA stock ahead of Q4 earnings. Further, the analyst’s price target of $9 implies a 32.5% downside potential from current levels.
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Paramount is likely to report its fourth-quarter financial results on February 15. Let’s delve deeper into Paramount’s Q4 expectations.
Factors to Impact PARA’s Q4 Performance
In a report dated January 11, Ehrlich said that the weakness in the advertising market could hurt Paramount’s revenue. Wall Street expects Paramount to deliver revenue of $7.86 billion for Q4 of 2023, compared to $8.13 billion in the prior year’s quarter.
The year-over-year decline in its top line reflects the continued weakness in ad revenues. During the Q3 conference call, Paramount’s management emphasized the ongoing challenges in the broader advertising market. Factors such as economic uncertainty, inflation, and reduced demand from some categories are affecting advertising spending. Additionally, Paramount expects a decline in Q4 ad revenue due to decreased political advertising, negative impacts from writers’ and actors’ strikes, and weakness in the international market.
Moreover, analysts expect PARA to post a loss in Q4 compared to earnings of $0.08 per share in Q4 of 2022.
What is the Outlook for Paramount Stock?
Wall Street is bearish about Paramount stock ahead of its Q4 earnings. PARA stock has a Moderate Sell consensus rating with two Buy, six Hold, and nine Sell recommendations. Paramount stock has dropped nearly 34% in one year. Despite this significant drop, analysts’ average price target of $14.06 implies a limited upside potential of 5.48% from current levels.
